• Directory of Taiwan launches new online music store launches new online music store wants to put a bruise in Apple Inc.'s digital music sales.
By opening its own online music store Tuesday and setting the price for many best sellers at 10 cents cheaper than at Apple's iTunes, Amazon signaled it intends to challenge Apple's dominant position.
Not too many companies are having luck these days going up directly against Apple, but Amazon is certainly a big enough player in Internet retailing to take a shot. It also has a marketing opportunity because the music it will sell is compatible with any MP3 device or music-playing mobile phone. Most music sold at the iTunes store only works with Apple's iPods.
"They know how to sell music," analyst David Card said of Amazon. "They are a serious player and could be a force in digital music.
But even though Amazon's music can play on any MP3 player, Apple is not likely to be threatened, said Card, who follows the media for JupiterResearch, because any success related to digital music is likely to help Apple's products, too.
Apple is "trying to sell the best media device on the market," he said. "If this helps them sell more iPods, I think they will be OK with that. The margins of being a retailer are a lot thinner than the margins of selling" high-tech devices like iPods.
Apple's shares rose US$4.90 on Tuesday, to close at US$153.18, US$0.04 shy of it's 52-week high.
Amazon shares rose US$0.89 to close at US$93.48.
At Amazon's online store, called Amazon MP3, top hits are priced from US$0.89 and top-selling albums start at US$8.99, one U.S. dollar less than the standard price at Apple's store. At iTunes, singles typically sell for US$0.99 and most albums are priced from US$9.99.
Pete Baltaxe, Amazon's director of digital music, would not say Amazon is directly challenging iTunes, the nation's third-largest music retailer even though it only sells digital files, but the marketing left little doubt: The artwork Amazon supplied to promote its service features the new album by Feist, whose catchy "1234" video is used in Apple's national television advertising.
That track was the top-selling single at Amazon's store on Tuesday, selling for US$88. On iTunes, it was the No. 2 single, selling for US$99.
But despite price, Amazon wants to make it clear that digital music bought at its store will work on any player, no matter who makes it. The songs do not include copy protection, known as digital rights management software. Most of the songs Apple sells on iTunes have DRM restrictions that limit those songs to playing only on iPods.
"There is an opportunity to provide our customers with an offering that has more selection, the most interoperable experience and great prices," said Baltaxe. Amazon, which has 69 million active customers, is the No. 4 retailer of music in the nation, according to research firm NPD Group. Now that it will also be selling digital music files as well new and used CDs, it could vault past Apple. The top 5 are Wal-Mart, Best Buy, Apple, Amazon, Target.
Amazon is launching its store with 2.3 million songs available for purchase, Baltaxe said. But while those songs can be played on any MP3 player or music-enabled mobile phone, it doesn't include music from two of the world's biggest record labels, Sony BMG Music Entertainment and Warner Music Group, which have not agreed to sell music files without copy protections.
The store is launching with unprotected files from major labels EMI Group and Universal Music Group as well as about 20,000 independent labels, Baltaxe said. Several of those independent labels, including Alligator Records, HighTone Records and Rounder Records, will be selling unprotected files for the first time.

Updated : 2021-10-20 11:43 GMT+08:00